What You Should Know Before Investing In Fidelity’s Bitcoin Retirement Accounts

This morning crypto advocates and the crypto curious alike woke up to the news that asset management giant Fidelity will start allowing investors to put bitcoin into their 401(k) retirement savings accounts. On its surface this looks like an easy way for individuals to get access to this emerging asset class in an advantageous way from a tax perspective. However, there are still some important considerations to take into account.

Here is what you need to know.

The service will be available later this year to participants in employee-sponsored retirement plans offered by Fidelity—but only if an employer opts to offer it. Annual gains in a 401(k) are tax deferred, which eliminates the hassles associated with crypto investing and annual tax reporting. Withdrawals from a 401(k) in retirement are either taxed as ordinary income (if you contributed to a traditional pre-tax account) or tax-free (if you put after tax dollars into a Roth account).

According to The Wall Street Journal fees on these investments will range between 0.75%-0.90%, plus trading fees which falls within the mid-range of spot market trading fees offered by most major exchanges in the U.S. such as Coinbase, Gemini, Kraken, FTX.US, and Binance.US. Additionally, for now, employees will only be able to allocate a maximum of 20% of their currently account balances and new contributions to bitcoin.

The service is going to be slowly rolled out over the course of 2022. Currently the only firm to have publicly signed on is business analytics firm MicroStrategy. Led by billionaire bitcoin bull Michael Saylor, MicroStrategy is the world’s largest corporate holder of bitcoin with a treasury topping $5 billion worth of the asset. And again, your employer will have to agree to offer the service. Some may balk at the asset’s volatility.

Back in 2013 you could purchase a single bitcoin for under $300. As of this writing, a whole bitcoin will run you approximately $40,000. This is gargantuan growth, but it has not been smooth.

There have been multiple occasions where bitcoin and other leading crypto assets have lost well north of 50% of their value (many of which happened before the industry broke into the mainstream consciousness). However, many investors likely remember bitcoin approaching $20,000 in late 2017 before losing 75% of its value in the subsequent months.

We saw another such drop during the late fall when bitcoin fell from $69,000 to the low $30,000s. Bitcoiners will tell you that the asset more than recovers each time that it gets knocked down. In fact, many consider riding these boom and bust cycles as a rite of passage. But it might not be for everyone.

While there may have been cheering throughout #cryptotwitter that Fidelity is letting clients dip their toes in bitcoin, the government may not be as happy. For starters, federal regulators have been very reticent at letting investors get easy exposure to the crypto spot markets, even bitcoin.

Famously, the Securities and Exchange Commission is yet to approve a bitcoin spot ETF (it has approved a handful of products that offer exposure to bitcoin futures contracts), often citing the market’s vulnerability to fraud and manipulation.

When it comes to retirement planning, volatility again comes into play. Bitcoin is down nearly 40% from its all-time high of just under $70,000 last November, and retirees and those soon to retire may not have the funds or time to ride out these boom and bust cycles. In fact, last month the Department of Labor issued a notice expressing several concerns with investing retirement funds in crypto.

Chief among them were the market’s extreme volatility, its emerging (cloudy) regulatory status, the inability of investors to make informed decisions, as well as more basic concerns about the security of holding crypto assets, which have become juicy targets for hackers. Labor’s concerns matter because it has a say in the regulation of employer sponsored plans.

In addition, when news came out last July that Coinbase, the largest crypto exchange in the U.S., had partnered with a retirement firm to offer such services, David John, a senior policy advisor at AARP Policy Institute and the deputy director of the retirement security project at the Brookings Institution, told Forbes: “Crypto itself is fascinating, and intriguing as it starts to develop, but it’s still in its early phases.

And it is definitely not appropriate for retirement investing.” Added John: “The fact is that for retirement investing, you want growth, and you want a limited amount of volatility. The older you get, the less you want your portfolio to gyrate up and down, because it makes it very hard to plan your retirement income.”

While Fidelity is a world unto itself when it comes to asset management and retirement savings, there are other ways to get your retirement savings access to crypto. Firms such as Kingdom Trust, iTrust Capital and BitcoinIRA let investors purchase digital assets via exchanges and hold them in individual retirement accounts.

Additionally, Coinbase partnered with ForUsAll in June to let participants in employer sponsored plans purchase dozens of different crypto assets and hold them in tax deferred programs.

Finally, if you want exposure to the industry but don’t want to directly hold digital assets, there are plenty of stocks and ETFs that track companies operating in the crypto industry that are highly correlated to the underlying assets.

Saving for retirement is a personal decision, and your strategy – from what to hold to allocation percentages must —depend on your specific circumstances. Please seek out a Registered Investment Advisor or other professional advice before making any big decisions.

I am director of research for digital assets at Forbes. I was recently the Social Media/Copy Lead at Kraken, a cryptocurrency exchange based in the United States.

Source: What You Should Know Before Investing In Fidelity’s Bitcoin Retirement Accounts

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Intel Will Invest $20 Billion On A New Chip Making Facility In Ohio

Intel plans to invest $20 billion to build a new chip-making facility in Ohio, the company announced on Friday, in a push to ramp up domestic production of semiconductors as global supply chain disruptions and increased demand have led to a massive worldwide chip shortage.

The chip-making facility will be built in New Albany on the outskirts of Columbus, Ohio, Time first reported, citing an official confirmation by Intel.According to the report, the new complex will first have two chip making factories and directly employ 3,000 people.

Construction of the complex will reportedly begin this year and the chip making plants are expected to be operational by 2025. According to the New York Times, Biden Administration officials—who have backed a legislative effort for major federal investment into semiconductor manufacturing to compete with China—are expected to discuss the Intel announcement on Friday.

Disruptions in the global supply chain caused by the Covid-19 pandemic has had a serious impact on semiconductors in the past two years, as well as a sharp uptick in demand for digital products as more people work from home. A majority of advanced computer chips—used by the likes of Apple, AMD and Qualcomm—are manufactured by Taiwan Semiconductor Manufacturing Company (TSMC), whose proximity to China has also raised some concerns.

Legislation known as the CHIPs act, which would provide $52 billion in subsidies for the semiconductor industry, was passed by the Senate with bipartisan support last year, but it is yet to be passed by the House. In an op-ed for CNN in December, Intel CEO Pat Gelsinger backed the federal package, noting that it may not solve the current chip shortages but will “be fundamental in avoiding them in the future.”

In an effort to regain supremacy in the chips business, Intel has pledged more than $100 billion in investments over the past year. These efforts have been driven by Gelsinger, who became Intel’s CEO last year. In 2020, graphics chips maker Nvidia overtook Intel to become the most valuable chip maker in the U.S. and last year it was overtaken by Samsung as the biggest chip maker by quarterly revenue.

In the past few years, Intel chips have also lost their performance crown to rival AMD in both the desktop and mobile computing markets, caused by several years of delays to its cutting end manufacturing process.

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Source: Intel Will Invest $20 Billion On A New Chip Making Facility In Ohio

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Intel Corp said on Friday it would invest up to $100 billion to build potentially the world’s largest chip-making complex in Ohio, looking to boost capacity as a global shortage of semiconductors affects everything from smartphones to cars. The move is part of Chief Executive Officer Pat Gelsinger’s strategy to restore Intel’s dominance in chip making and reduce America’s reliance on Asian manufacturing hubs, which have a tight hold on the market.

An initial $20 billion investment – the largest in Ohio’s history – on a 1,000-acre site in New Albany will create 3,000 jobs, Gelsinger said. That could grow to $100 billion with eight total fabrication plants and would be the largest investment on record in Ohio, he told Reuters. Dubbed the silicon heartland, it could become “the largest semiconductor manufacturing location on the planet,” he said.

While chipmakers are scrambling to boost output, Intel’s plans for new factories will not alleviate the current supply crunch, because such complexes take years to build. Gelsinger reiterated on Friday he expected the chip shortages to persist into 2023.

To dramatically increase chip production in the United States, the Biden administration aims to persuade Congress to approve $52 billion in subsidy funding. read more

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Get Bigger, Go Faster: How Venture Capital Markets Won By Tossing Out Their Rulebooks In 2021

Mark Goldberg knows how much the venture capital market has changed in recent years. A partner at Index Ventures, Goldberg remembers the days when investors would meet up on Monday mornings to sip cappuccinos, pore over pitch decks and dig into due diligence. But in today’s record-breaking market, things look a little different.

At his firm, lengthy investor meetings have been replaced with blocked calendar slots in case a partner has to sign a last-minute term sheet quickly. “The whole way that we have organized has changed to adapt to the market, ” Goldberg says. “Now capital is on demand. You can get a round done in 24 hours from a traditional VC fund and a host of new entrants.”

The due diligence process for a potential startup investment is extensive and entails gathering market data, rifling through documents of financial data and getting to know a company’s founders and customers through interviews.

This exercise used to take months on average, but in today’s market, venture capitalists have a week or two for the process — if they are lucky. Most are left to cram months of diligence into a weekend or in some cases, a single day. VCs have adapted streamlined strategies built on efficiency — all while attempting to avoid sacrificing quality. 

For many that has meant making the process more fluid than formal. VCs aren’t waiting for companies to come pitch to them, instead they are constantly tracking and gathering insight on startups that could be potential portfolio companies in the future.

Multi-stage firm Felicis Ventures even hired a head of research in 2021 to assist with this. Frontloading the work gives VCs a “prepared mind” — as multiple investors put it — allowing them to move quickly when presented with a term sheet. “We’ve done months and months of work that is invisible to the founder,” Goldberg says. “The diligence is more intensive now. It’s just you have to pick and choose your battles and be ready on a minute’s notice to say yes. You need to make a decision three months ahead.”

Seed-focused micro fund Bowery Capital says its small team has managed to fit the process into two to three weeks but can push really hard to get things done faster if needed. Bowery general partner Mike Brown tells Forbes that operating on an expedited timeline has pushed the firm to give more weight to new areas of due diligence.

“We really over-index on the team and clear their prior execution ability,” Bowery says, noting that as a seed investor these decisions surround a potential 10-year plus relationship. “If there is one thing we can’t get wrong with this stuff, it’s picking the wrong founders.”

As a solo general partner, Nisha Desai, the founder and managing partner at Andav Capital, says last year forced her to be incredibly disciplined with her time to make sure she gives herself enough time to properly research and prepare. Thankfully though, she thinks founders have also leaned into the dynamic.

“I will say founders have gotten smarter about due diligence. I rarely get deep or even do a first call, until I have enough information,” she says. “That’s something founders should recognize for solo GPs, our biggest asset and most valued asset is our time. We are only going to spend time with you if we think something is there.”

The compression of due diligence comes in lockstep with a huge new influx of capital into the venture world. On the seed level, the number of firms has grown from about 120 in 2013, when Pejman Nozad started his firm Pear, to “thousands” today, he says. Solo shops like Desai’s Andav Capital are also picking up steam. In some cases, angel investors have “morphed into more of an institutionalized firm,” says Defy Partners founder Neil Sequeria.

The abundance of capital has, in turn, allowed companies to raise money at an unprecedented rate, says IVP general partner Jules Maltz. Hopin, a virtual events startup in which Maltz’s firm invested, has raised four funding rounds since June 2020, in the process growing its valuation to $7.8 billion from $245 million. “Historically, 18 months was a good time period between one round and the next round,” Maltz says.

Although the most active investors in 2020 were blue chip venture firms, the first half of 2021 saw crossover funds Tiger Global and Insight Partners take pole position, according to data from Crunchbase. “The hedge funds and public investors who’ve come into the private markets have pushed the existing private investors like us to start upping our game on how we do diligence,” Maltz says.quintex-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-2-2-1-1-1-1-1-1-1-1-768x114-1-1-2-1-1-4-1-2-2-1-2-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1

But while venture shops have been forced to adjust to the hedge fund playbook in some ways, they are also changing the industry on their own terms. “One thing I think Andreessen Horowitz started, which isn’t often attributed to them, is this investing strategy where you put massive amounts of money into a seed deal which has nothing substantial yet to validate the valuation.

Yanev Suissa, managing partner of SineWave Ventures, a firm which specializes in public sector guidance for startups. The logic for these heavyweights, with whom SineWave often co-invests, is that one huge success in the portfolio is enough to validate all the high-risk bets.

“I think the other traditional bigger venture funds are going to be forced to follow that trend,” Suissa says. “They’re already starting to, and they’re going to keep doing it even if there isn’t a ton of financial discipline associated with it. That will be a problem going forward that every venture fund is going to have to navigate.”

Forbes reported in December that data connector startup Airbyte raised funds at a $1.5 billion valuation despite its annual recurring revenue not yet reaching $1 million. Another example in Andreessen Horowitz’s own portfolio is the data infrastructure startup Anyscale, which raised at a $1 billion valuation in December despite reports that its annual recurring revenue was below $5 million.

Cofounder Ion Stoica contends the company’s open source origins justified its valuation markup because it created a market even before sales commenced. He points to successful open source companies like Databricks and Confluent as precedent; even still, both firms were valued at half the price of Anyscale at the same funding stage.

In the case of Databricks, the company had $12 million in revenue ahead of its raise. To Ben Horowitz, who has invested in both Databricks and Anyscale, the influx of unicorns is simply a sign that VC is finally starting to reflect the market reality.

“I do think people get confused by the numbers when you look at them versus historical valuations,” Horowitz says. “In some ways, everything was undervalued in venture capital by a lot in that we were doing deals for very cheap for things that could be worth $100 billion. Pricing is catching up to what’s actually going on in the world.”

I’m a reporter covering venture capital, startups and investors out of New York. I was previously a reporter at the Venture Capital Journal and Private Debt Investor. I graduated from Emerson College in 2017 with a degree in journalism. Follow me on twitter at @rebecca_szkutak or send me an email at rszkutak@forbes.com. 

I am a senior reporter for technology, covering venture capital and startups with a focus on Silicon Valley and the greater West Coast. I am based out of Forbes’ San Francisco bureau, where I previously covered tech billionaires as a wealth reporter, and wrote about artificial intelligence as an assistant editor for technology. I graduated from Duke University, where I spent time as news editor for The Chronicle, the university’s independent news organization. Follow me on Twitter at @kenrickcai and email me at kcai [at] forbes.com.

Source: Get Bigger, Go Faster: How VCs Won By Tossing Out Their Rulebooks In 2021

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The Best Investing Strategies For Inflationary Times

Well, it’s finally here – the ‘I’ word is back. After threatening to poke its head out and mess with all of our financials, we are now in the state of ‘transitory inflation’.  The term itself is menacing. Investors are concerned. Ideas are flying around, yet it is not clear what investors should do if anything.

What exactly is ‘transitory inflation’? Inflation is the progressive increase in prices for goods and services over time. Further if something is transitory, it could mean it isn’t permanent or that it lasts a short period of time. To give context, since 1926, the historical average inflation rate is 2.6%. Today it is trending closer to 5.4%.

Looking through this lens, investors are simply solving for how to manage their portfolios for what may be a very short period of time. When there are challenges in the marketplace, the best advice is to stick to your knitting.  It’s boring, but it’s often the right move.  An asset allocation strategy works because it is built to withstand all market cycles.

But just because that is the right advice, it doesn’t mean investors follow it. What investors really want is to do something – take some action.

There are a few moves investors can make right now that might alleviate their stress over inflation and manage the impact on the portfolio. One is strategic and two are more tactical in nature. These ‘hedges’ so to speak, can provide investors with some peace of mind in navigating the markets.

One is strategic and two are more tactical in nature. These ‘hedges’ so to speak, can provide investors with some peace of mind in navigating the markets.

Run Towards Equities and Away from Cash

Out of all the choices an investor needs to make in fighting inflation, perhaps the best advice is simply the easiest to follow. Stay invested in equities.

It is straightforward and pragmatic advice.  A company facing rising costs, can simply offset them by raising prices, which raises revenue and earnings. A win for the company and the investor. It’s a perfect inflation hedge and is consistent with an asset allocation strategy.

Investors who are more anxious about inflation may want to allocate even a few percentage points more of their portfolio to equities to fight off these fears. Remember, we said this inflationary period is transitory; when prices stabilize, investors can simply peel back this excess allocation.

And one thing to remember is that this time around, with inflation, savings rates are also not rising as well. This is contrary to other periods of high inflation where savings rates also rose as interest rates increased. Being in the equity market allows an investor to pick up more return and over time will increase their purchasing power.

Tilt Towards Floating Rate

In a well-allocated portfolio, the bulk of the fixed income exposure should come from high credit quality bonds. However, in this market, fixed income returns have been flat to negative. For investors looking to fight off inflation, this seems like a losing battle.

There is one segment that may serve as a hedge. It’s called a floating rate bond fund. This investment can be added as a tactical tilt to a portfolio that can make all the difference in an inflationary environment. But investors need to understand how these funds work.

Typically, floating rate bonds are variable interest rate loans banks make to companies. In terms of credit quality, the loans are considered senior debt, which means that in the event of a company’s insolvency, it is higher up on the repayment schedule than other holdings such as high yield.

But these instruments are unique in a high inflationary environment because when inflation causes prices to rise, it also raises the interest on the bonds. Including a fund with these bonds in a portfolio can give investors a little bump to fight off some of the negative impact that inflation has on their other bond holdings. A tilt in the 1-3% range is sufficient.

Commodities Can Be a Help

The other tilt that investors can make is the tried-and-true commodities play. Commodity prices often go up in a period of inflation, so holding them allows investors to benefit from the demand for these assets.

Making an allocation to commodities really is about being diversified. A diversified commodities fund will mitigate some of the risk profile of this investment. And like the floating rate bonds, a tilt is more than sufficient to help as an inflationary hedge.

Inflation May or May Not Be Transitory

Americans have been fortunate to be in a low inflationary market for some years, due to technology, globalization and reduced inflationary expectations. But the Covid-19 pandemic has wreaked havoc.

As we go through this ‘transitory’ period, it’s important to stay focused on the components of portfolio construction. Staying invested is really the best thing an investor can do to weather the ups and downs of the current market.

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Ever since my first tax class in law school, I have been fascinated by wealth and the journey one takes to achieve it. Driven by this passion, I have spent

Source: The Best Investing Strategies For Inflationary Times

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The World’s Newest Call Center Billionaire

Meet the world’s newest call center billionaire. Laurent Junique is quite the globe-trotter: He’s a French citizen, his company is based in Singapore and he just listed that company, TDCX Inc., on the New York Stock Exchange last week.

Junique, TDCX’s 55-year-old founder and CEO, also just joined the billionaire ranks: Junique’s 87% stake in the firm is now worth $3 billion, thanks to a 34% rise in TDCX shares since the IPO on October 1—an offering that raised nearly $350 million for the company.

Started in 1995 in Singapore as Teledirect, an outsourced call center that handled calls, emails and faxes for a variety of clients, the company rebranded as TDCX in 2019 to reflect its expansion into a range of services including content moderation, marketing and e-commerce support. (CX is short for “customer experience” in the customer service industry.)

TDCX reported a $64 million net profit on $323 million sales in 2020, an improvement from the $54 million profit and $242 million in revenues it recorded in 2019. That growth came in part due to greater use of the services that TDCX offers, including tools that help companies improve the performance of employees working from home. Still, TDCX is highly dependent on two clients—Facebook and Airbnb—which collectively accounted for 62% of sales in 2020.

“Our successful listing reflects the world-class company that we have built and our position as the go-to partner for transformative digital customer experience services,” Junique said in a statement on the day of the IPO. “We are grateful for the support of our clients, many of whom are global technology companies that are fuelling the growth of the digital economy.”

Junique is the second call center billionaire that Forbes has tracked. The first, Kenneth Tuchman, founded Englewood, Colorado-based TTEC Holdings (formerly called TeleTech), in 1982; at nearly $2 billion, the firm had about six times the revenues of TDCX last year. Tuchman first became a billionaire in 2007. Several Indian billionaires, including HCL Technologies cofounder Shiv Nadar and Wipro’s former chairman Azim Premji, offer call centers as some of the services their firms provide.

Junique will maintain an iron grip on TDCX as a public company, controlling all of the firm’s Class B shares, which make up more than 86% of the firm’s equity and represent 98.5% of voting power. He owns those shares through Transformative Investments Pte Ltd, a company based in the Cayman Islands that is entirely owned—according to public filings with the Securities and Exchange Commission—by a trust established for the benefit of Junique and his family. While its headquarters are in Singapore, TDCX has also been incorporated in the Cayman Islands since April 2020; prior to the IPO, the firm was controlled by Junique through a Caymans-based holding company. A spokesperson for TDCX declined to comment.

Before launching TDCX as a 29-year-old in 1995, the French native cut his teeth studying advertising at the École Supérieure de Publicité in Paris and business administration at the nearby École Supérieure Internationale d’Administration des Entreprises, graduating in 1989. After a two-year stint at consumer goods giant Unilever, Junique—who had reportedly been cooking up business ideas since he was a child, including a glass recycling proposal he came up with at age 13—decided he wanted a more international career, but struggled to find a gig as a young graduate with little experience.

Armed with a suitcase and just enough cash to get by, he decamped to Singapore in 1995 to try his luck on the other side of the planet. Singapore offered a strategic location as a modern, English-speaking city at the heart of fast-growing Southeast Asia, and Junique started a call center called Teledirect aimed at businesses looking to cut costs and outsource customer service. Soon enough, Junique scored the firm’s first big client, an American credit card firm based in Singapore.

Two years later, in 1997, Junique sold a 40% stake in Teledirect to London-based advertising giant WPP for an undisclosed amount. Since then, TDCX expanded beyond call centers and now has offices in 11 countries across three continents, including locations in China, Japan and India. In 2018, Junique bought back WPP’s 40% stake in the call center business for about $28 million. Three years of growth later, the company now has a market capitalization of $3.5 billion.

With 2020 marking a record year for TDCX, Junique is hoping that the Covid-induced transition away from offices has made the firm’s products more necessary for its clients. “As consumers live more and more of their lives online, the expectation for things to be done simply, conveniently and on-demand will only increase,” Junique said in a statement.

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I’m a Staff Writer on the Wealth team at Forbes, covering billionaires and their wealth. My reporting has led me to an S&P 500 tech firm in the plains of Oklahoma; a

Source: The World’s Newest Call Center Billionaire

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“BBC Three – The Call Centre, Series 1”. Bbc.co.uk. 2013-12-10. Retrieved 2017-12-10.

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